2005 (4) TMI 184 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Ayurvedic products under Chapter 30 or Chapter 33 of the Central Excise Tariff Act, 1985.
2. Eligibility for exemption/concessional duty under notifications 75/94-C.E. and 8/94-C.E.
3. Eligibility for slab-wise exemption under notification 140/83-C.E.
4. Calculation of duty on cum-duty price.

Issue-wise Detailed Analysis:

1. Classification of Ayurvedic Products:
The appellants, M/s. Ayurchem Products, manufacture 13 Ayurvedic preparations and classify them under Chapter 30 of the Central Excise Tariff Act, 1985, claiming them as Ayurvedic medicaments eligible for exemption. The department contends that these goods fall under Chapter 33 as cosmetics or toilet preparations. The Tribunal examined the relevant chapter notes and determined that preparations under Chapter 33, even if they have therapeutic properties, are excluded from Chapter 30. The lower authorities found that the products are used for skin care, hair care, and dental care, classifying them under headings 33.04, 33.05, and 33.06 respectively. The Tribunal upheld this classification, citing the Supreme Court's decision in Alpine Industries, which emphasized the importance of chapter notes in determining classification.

2. Eligibility for Exemption/Concessional Duty:
The appellants argued that their products should be classified under sub-heading 3003.30, making them eligible for exemption under notifications 75/94-C.E. and 8/94-C.E. However, the Tribunal found that the products do not meet the criteria for classification under Chapter 30 and are therefore not eligible for the concessional duty under these notifications.

3. Eligibility for Slab-wise Exemption:
The appellants claimed slab-wise exemption under notification 140/83-C.E. The Tribunal rejected this claim because the appellants did not file the required declaration under the notification, failing to satisfy the basic condition for entitlement.

4. Calculation of Duty on Cum-duty Price:
The appellants contended that the duty should be calculated on the cum-duty price. The Tribunal agreed, referencing the decision in Srichakra Tyres, which held that proper abatements should be given when calculating duty based on the price charged. The Tribunal directed the original authority to recalculate the duty, treating the price as a cum-duty price, and to redetermine the penalty accordingly.

Conclusion:
The appeals were allowed by way of remand with the following directives:
(a) The impugned goods are classifiable under Chapter 33 of CETA, 1985, and are not eligible for concessional duty under notifications 8/94 and 75/94.
(b) Exemption under notification 140/83 is not available.
(c) Duty should be recalculated considering the price charged as cum-duty price. The original authority is to redetermine the duty and penalty after providing a reasonable opportunity for the appellants to be heard.